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Notes to the financial statements

32. Acquisitions

Acquisition of subsidiaries

The Group made no material acquisitions of subsidiaries in the year ended 31 December 2009.

In the year ended 31 December 2009 fair values shown principally include final adjustments to the fair value of assets acquired and liabilities assumed in the Anglo Ferrous Brazil SA acquisition, including the recognition of provisions in respect of certain power arrangements.

The carrying value and fair value of the net assets at the date of acquisition of a controlling interest and related net cash outflows are shown below:

  2009   2008
US$ million Total carrying value Total fair value   Total fair value
Net assets acquired        
Tangible assets 1 (4)   997
Other non-current assets - -   109
Current assets 2 4   457
Current liabilities (1) (8)   (314)
Non-current liabilities - (11)   (547)
Minority interests - -   (230)
  2 (19)   472
Add: Value attributable to reserves and resources acquired, net of deferred tax(1)   21   1,649
Fair value of net assets acquired   2   2,121
Goodwill arising on acquisitions   2   1,610
Total cost of acquisitions   4   3,731
Satisfied by        
Net cash acquired   -   255
Net cash paid(2)   4   3,476
(1)
Represents the Group's share of value (implicit in the transaction) of reserves and resources, capitalised within tangible assets.
(2)
Represents net cash paid to acquire a controlling interest and therefore excludes $75 million paid to acquire minority interests in existing subsidiaries (2008: $2,411 million). In the year ended 31 December 2009 this principally related to Anglo Ferrous Brazil SA (2008: Anglo Ferrous Brazil SA and Anglo Platinum Limited). When totalled with net cash paid to acquire control, the net cash paid for acquisition of subsidiaries in the year ended 31 December 2009 is $79 million (2008: $5,887 million).

In the year ended 31 December 2008 the Group purchased 7,941,964 shares in Anglo Platinum Limited for total consideration of $1,108 million. The cash paid in the year ended 31 December 2008 was $1,113 million. At 31 December 2009 the Group's shareholding in Anglo Platinum Limited was 79.7% (2008: 79.6%). The increase in the Group's shareholding since 31 December 2008 is due to treasury shares purchased by Anglo Platinum Limited in the year.

On 5 August 2008 the Group acquired a 63.3% shareholding in Anglo Ferrous Brazil SA, which holds a 51% interest in the Minas Rio iron ore project (Minas Rio) and a 70% interest in Amapá at a price of R$28.147 ($18.056) per share. At that time the Group committed to extend the offer to the minority shareholders of Anglo Ferrous Brazil SA. This offer was formally made on 31 October 2008 and remained open through the first quarter of 2009, resulting in a Group shareholding in Anglo Ferrous Brazil SA at 31 December 2009 of 100% (2008: 98.9%). Total cash paid to acquire a controlling interest was $3.5 billion and a further $2.0 billion (including cash settlement of a related derivative instrument ($0.7 billion)) was paid to acquire minority interests. In the year ended 31 December 2009 $49 million was paid to acquire remaining minority interests. These transactions followed on from the acquisition in 2007 of a 49% interest in each of Minas Rio and LLX Minas Rio, which owns the port of Açu. As a result of these transactions the Group's effective shareholding in each of the operating entities at 31 December 2009 was 100% in Minas Rio, 49% in LLX Minas Rio and 70% in Amapá (2008: 99.4% in Minas Rio, 49% in LLX Minas Rio and 69.2% in Amapá).

Acquisition of material joint ventures

The Group made no material acquisitions of joint ventures in the year ended 31 December 2009 (2008: one).

The fair value of the net assets acquired and related net cash outflow for the prior year are shown below:

US$ million 2008(1)
Net assets acquired  
Tangible assets  
Value attributable to reserves and resources acquired 835
Other tangible assets 108
Current assets 41
Current liabilities (37)
Non-current liabilities (97)
Fair value of net assets acquired and total cost of acquisitions 850
Satisfied by  
Net cash acquired 1
Deferred consideration 242
Net cash paid(2) 607
(1)
Relates to the acquisition of Foxleigh and fair value adjustments on the acquisition of a 49% interest in Minas Rio (which took place in 2007). During 2008 further consideration of $284 million (which is contingent on certain criteria being met) was recognised in respect of the acquisition of the 49% interest in Minas Rio. This was reduced from the $600 million recognised in the six months ended 30 June 2008, as a result of a change in the assumptions with regards to payment and purchase of an additional interest in Minas Rio together with an adjustment to the net deferred tax liability recognised to reflect the future tax benefit from cash payments made on acquisition. These adjustments resulted in amendments to the 'Value attributable to reserves and resources acquired' and deferred tax in the acquisition balance sheet.
(2)
In the year ended 31 December 2009 there was net cash paid of $5 million (2008: $2 million) for other joint venture acquisitions. This resulted in total net cash paid for investments in joint ventures in the year ended 31 December 2009 of $5 million (2008: $609 million).

On 29 February 2008 Metallurgical Coal completed the acquisition of a 70% interest in the Foxleigh joint venture in Queensland, Australia. The total cost of acquisition was $606 million. The Group has proportionately consolidated 70% of Foxleigh from 29 February 2008.

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Annual Report 2009